DuPONT ANALYSIS

A firm has been experiencing low profitability in recent years. Perform an analysis of the firm's financial position using the DuPont equation. The firm has no lease payments but has a $2 million sinking fund payment on its debt. The most recent industry average ratios and the firm's financial statements are as follows:

Industry Average Ratios
Current ratio	3.72x		Fixed assets turnover	8.77x
Debt-to-capital ratio	14.28%		Total assets turnover	3.54x
Times interest earned	15.24x		Profit margin	7.20%
EBITDA coverage	16.42x		Return on total assets	26.83%
Inventory turnover	10.00x		Return on common equity	35.24%
Days sales outstandinga	25.85 days		Return on invested capital	34.57%

aCalculation is based on a 365-day year.

Balance Sheet as of December 31, 2016 (Millions of Dollars)
Cash and equivalents	$60		Accounts payable	$34
Accounts receivables	57		Other current liabilities	20
Inventories	134		Notes payable	27
Total current assets	$251		Total current liabilities	$81
			Long-term debt	13
			Total liabilities	$94
Gross fixed assets	157		Common stock	77
Less depreciation	73		Retained earnings	164
Net fixed assets	$84		Total stockholders' equity	$241
Total assets	$335		Total liabilities and equity	$335

Income Statement for Year Ended December 31, 2016 (Millions of Dollars)
Net sales	$670.0
Cost of goods sold	495.8
Gross profit	$174.2
Selling expenses	67.0
EBITDA	$107.2
Depreciation expense	11.4
Earnings before interest and taxes (EBIT)	$95.8
Interest expense	4.4
Earnings before taxes (EBT)	$91.4
Taxes (40%)	36.6
Net income	$54.8

Calculate the following ratios. Do not round intermediate steps. Round your answers to two decimal places.

	Firm	Industry Average
Current ratio	x	3.72x
Debt to total capital	%	14.28%
Times interest earned	x	15.24x
EBITDA coverage	x	16.42x
Inventory turnover	x	10.00x
Days sales outstanding	days	25.85days
Fixed assets turnover	x	8.77x
Total assets turnover	x	3.54x
Profit margin	%	7.20%
Return on total assets	%	26.83%
Return on common equity	%	35.24%
Return on invested capital	%	34.57%

Construct a DuPont equation for the firm and the industry. Do not round intermediate steps. Round your answers to two decimal places.

	Firm	Industry
Profit margin	%	7.20%
Total assets turnover	x	3.54x
Equity multiplier	x	x